I must apologize to my readers, I have been too busy over the past 6 months to sit down and write as often as I should. Since January, I have only had time to write once. I shouldn’t really be taking the time now to write this but I have put it off for too long. There have been some significant changes in the real estate market in the Bahamas lately.

The Iconic Abaco Estate, Man O War Cay.

If you talk to seasoned real estate brokers in the Bahamas how have been in the profession for 20 years or more, they will tell you that historically in the US election year the market in the Bahamas dips. Suggested reasons include pre-occupation of the US buyers, or uncertainty for the US economy based upon who wins the presidency, or simply that would be buyers are putting money into the campaigns of their chosen candidate. Who knows the real reason – there is only opinion and anecdotal evidence. And until 2008 there really was little empirical evidence to prove that the market was up or down. As I’ve written in this blog before, the presence of our Bahamas MLS is a great improvement and tool for the real estate business in the Bahamas. We now have 8 years of good data with the possibility to tease out some real trends based upon real numbers. It’s night and day compared to the end of the 20th century when the internet was still unfolding.

We still have little real access to data from the Government. But perhaps in the future that will change. There is a silver lining to the implementation of VAT – a brand new division of government was established to collect and keep track of Value Added Tax. It is called the Department of Inland Revenue (i know, very original right?) This division is staffed in large part by trained accountants, who will hopefully keep good records. Through the collection of VAT, there may be a beneficial result in the provision of detailed accurate data on the performance of the economy and perhaps even real estate.

The Bahamas still needs to clean up its act in terms of the ease of doing business in real estate transactions. Ask any real estate professional and they will tell you the current system is not sustainable. Excessive costs, taxes, inadequate recording, and insufficient tenure of title are a few of the downfalls in the business. Add to it he need to provide an appraisal for every real estate transaction and the speed with which a sale can occur gets slower and slower every year. It is still possible to close a sale in 2 months, but it is the exception.

Now for some hard numbers: Last year January –June 2015 saw 248 real estate transaction recorded on the Bahamas MLS, the same period this year is posting 291 sales. A 17% increase in sales activity is stellar. Equally positive is the increase from 209 transaction during the 6 month period of 2014, showing a year over year increase of 19%. (Side note: There are 25 properties still pending from 2013 on the MLS)

The table shows a strong growth in sales volume in the Bahamas. I expect this trend to continue steadily. Given this is a US election year which is supposed to be a slow period for sales in the Bahamas and given the data shows a strong market leading into this election, it is reasonable to assume that the real estate market in the Bahamas will see a bumper year. Dare I say bubble? Or is that too early?

If the 17% growth continues, we can expect to see 340 transactions in the first half of 2017.

One interesting point for sellers to note, is that over the past 4 years, there has been a steady 3000 listings on the Bahamas MLS. (this year is 3,010, last year was 3,008). This would tend to support the idea that there are a large number of sellers around the Bahamas who are fishing with prices which are unrealistic. And these sellers continue year in and year out just hoping the movie star or lottery winner comes along to buy their home because it is so much better than the neighbors. While at the same time there is a large segment of the market who are likely listening to their Realtor or broker and being serious about getting their home or land sold. Point is, listen to the real estate professionals, and get second and third opinions on pricing and values. Don’t list with a company or agent just because they say they can sell it for the highest price. Work with the realtor who is giving you the real picture.

There are a few really good opportunities around to take advantage of this growth in the Real Estate Market. One of them is a package of 16 beachfront condominiums in Marsh Harbour. The possible returns could be substantial with the right person at the wheel. Take a look at the details here:

PS: the construction incentive, called the Out Island Encouragement Act, was extended for another year so building materials are still import duty free until June 2017. VAT is still payable though. This is a good reason to start building that dream home now. Call or email if you have any questions about this.

All I can say it is has been an extremely busy 2014 so far in the real estate business. I have not been able to make myself sit down and write up an update to this blog. Every week, Every day has been non-stop trying to keep up with the demand. Demand for appraisal work and for sales work and often juggling both can be tricky. Both disciplines have specific time frames to work with. Buyers and sellers want immediate responses and while clients looking for appraisals are always on a limited time budget.

Speaking of Appraisal work – there has definitely been an uptick in appraisals services volume which indicates that a) credit is become more available and mortgages are become easier to obtain and b) consumers of real estate and loans are expressing more confidence in the economy. Typically you would not borrow money if your financial future was looking poor right? I will mention that the commercial banks in the Bahamas have severely clamped down on appraisal standards and lending requirements here. In the past a simple cost/replacement calculation would have sufficed to justify a value estimate however now every local bank is requiring that at least 2 comparable sales are included in the analysis and used to justify the final number reported. In some ways this is a good thing for our market, it is a maturation of the lending and mortgage business here partly as a result of the implementation of the Bahamas MLS. On the other hand it means value estimates are generally lower than they were in the past and less subject to the ‘interpretation’ of the appraiser. In any event higher reporting standards will benefit everyone in the long run.

How is the Abaco Real Estate market doing these days?

Well I’ve pulled up some sales activity numbers from the MLS which give a pretty good snap shot of the past year. Everyone is aware that the South Florida real estate market saw a strong bounce back and return to positive appreciation about 2 years back (2012). We expected it to happen in the Bahamas last year however while 2013 saw a little improvement, appreciation was stagnant. 2014 appears to be seeing a similar flat line in property values but that is a good thing, certainly better than a declining market. Steady markets are good, they are reliable, predictable and safe. Excessive appreciation is often a bad thing leading to a correction as we have all seen about 5 years back.

The past year of Abaco Real estate sales volume shows a huge uptick this year:

You can see at the end of 2013 there was a steady transaction rate of 2-6 which is reflective of the whole of 2013 and typical or 2012 also. You will notice that as of February, there was a marked improvement in sales volume. You will also note the modest increase in sales of properties over $1M.

Additionally, August is typically one of the slowest months of the year for sales, but this year is looks like it is one of best of the year.

All in all, I have strong confidence that the market in Abaco is back on track and we will see some good but steady growth this coming year.

That confidence is supported by several factors at play that will return Abaco and the Cays back to a strong yet sustainable growth level.

Treasure Cay is supposed to have a new managing partner coming on to take over and rejuvenate the community. The area sorely needs some new energy to revitalize and upgrade. It is a shame because the community has such tremendous potential but is being held back in my opinion.

Great Guana Cay maybe seeing some big things coming on stream soon, but more to come on that later.

Unfortunately Green Turtle Cay is still struggling a little in terms of visitors, but this is proving to be a positive aspect for the second home owner market. Folks are finding the quiet and peace away from the busy tourist action the ideal spot for a quaint second home. The old New Plymouth Inn is ready for new life and would be a wonderful retirement project for the right person. It has lots of history and character and would be a ton of fun to return to it’s glory days.

Lastly, my 2 cents – A house painted white seems to have serious trouble selling in the Bahamas. I suppose it is the only colour to paint a house in certain parts of Greece but it does not seem to work here. Anecdotally, there are several bargain homes on the market in Abaco that have been sitting for a good long while and I attribute it to the colour of the house – white. Similarly unpainted cedar siding seems to be equally difficult to sell.

Happy back to school and International Literacy Month, And Coastal Cleanup Month!

I really shouldn’t put this in writing, but on 4 occasions over the past 2 weeks I have had inquiries from buyers who were interested in a particular property in Abaco and the property had just gone to contract, no longer available. I hope this trend continues. As I’ve said before it is the perfect time in the market pendulum swing to buy. My sister is visiting from the UK and telling me how the market there has heated up significantly with bidding wars commonplace among buyers. As noted in my last post Florida is up 30% year over year, and seeing more and more gains every week. The Bahamas is sure to follow, with recent growth in the luxury segment in Nassau. Exuma and Eleuthera are still struggling a little, but I expect those islands to follow suit too very soon. Especially Exuma where a duty free building incentive is still in place making it inexpensive to build a home there.

Thanksgiving and Christmas are two of the best occasions in Hope Town, so make a note in your calender for The Box Cart Derby on the Saturday of Thanksgiving – great time. And the annual Hope Town Sailing club Boxing day race the biggest and most prestigious of the year. Christmas time is just a really nice time to be on the cays anyway. And there are some spanking great New Years celebrations around the island. Pete’s Pub is always a good one, and the Abaco Inn and Sea Spray always put out good spreads.

Oh… And the new Domestic (and Non-USA International) Departure terminal was opened recently and I had the pleasure of traveling through it recently. It is very nicely done, and a massive improvement over the 50 year old terminal that we were using before with the leaky roof and terrible chairs. enjoy these photos I took.

This coming weekend make a note of the Kayak Challenge which is a really great time, don’t forget to buy a raffle ticket for the Hobie kayak.

Well, a lot has happened recently: Lou Reed will be missed, World Polio Day marked the near eradication of the disease on the 24th Oct, Hurricane in the UK, and this week marks 1 year since Hurricane Sandy hit the east coast. Thankfully, Abaco and the rest of the Bahamas have escaped all the major storms this year. The hurricane season is not over yet though and once in a rare while a storm will come through in November.

I always tell folks that if a home survived Hurricane Floyd it will survive anything. It is described with bone chilling details by some of the locals who witnessed it. There weren’t any deaths, but the destruction to property was unprecedented. Some people on the cays say it was so bad, they drained their concrete water cisterns and rode out the storm inside. The tanks are usually 8” to 10” solid concrete to as good as any bomb shelter and the perfect sanctuary from extreme elements.

It describes Hurricane Floyd as the worst on record since the 1929 storm. The ’29 hurricane was so bad because it did a U-turn and came back to hit Nassau a second time.

In the real estate market – Things are looking like they are improving at the moment. The broker at HG Christie, John Christie says he is seeing a good boost to activity – there have been a few good sales in the luxury segment notably at Ocean Club, and Lyford Cay in Nassau. John also noted that the private island’s market has seen a good boost recently, but in the same breath he says that private islands sales seem to be a completely different world. (meaning the ups and downs don’t seem to correspond to the rest of the real estate market). The new development projects in Nassau are doing well, and being well received by the market, namely Balmoral, Albany, the Old Fort Bay Town Centre.

In my recent experience, the year of 2013 started out well, with plenty of activity during the first three months, then as of April it seemed like someone turned off the tap the real estate market in Abaco seemed to be in the doldrums all summer. Then lately, over the past 6 weeks it is like another mini uptick in interest and activity. 3 times in the past 2 weeks I’ve had serious inquiries from buyer who were literally a week or two too late. The property had just been signed up and deposit either down or expected to be soon. One purchaser in August/September took a long time to send in the deposit and after 8 weeks of waiting, another buyer showed up, wrote a check and bought the property. So these are signs that things may be turning around. The Florida market is up 30% year over year, and inventory is now at the lowest point since 2007. When supply is low, it pushed values up. So what is happening is sellers who were waiting for improvement are not starting to get into the market.

Here in the Bahamas we generally see a 9-12 month lag time between an upturn in the market in Florida and when that spills over to the Bahamas. The mechanism of why this happens is not really understood, but I would love someone to do some research and tell me (anyone?). That said, many brokers that I speak to in the Bahamas are expecting a significant upturn in the market during the spring of next year. – All assuming there isn’t a massive fall out from the new VAT tax regime set to become reality in the Bahamas in July 2013.

What are the current stats on the Bahamas MLS? 1,756 active listings right now for the entire Bahamas. 557 active listings in Abaco. While this is a large inventory which is a good thing for buyers, the number of well-priced properties is fairly limited. In my humble opinion probably under half of all properties on the Active Bahamas MLS database are priced to sell. The other half are all ‘fishing’ or simply unwilling to face reality. So, in Abaco that would leave less than 278 well priced active listings, we’ve had 67 sales for the year 2013 to date, and probably another 4 or 5 this week that aren’t updated as yet. That is an Absorption rate of 7 a month, which is higher than we’ve seen in 5 years.

Bahamas wide, there have been 279 transactions on the Bahamas MLS for 2013 year-to-date, again a good indicator, though a long way from a seller’s market.

Things are looking up for the market, and while prices are not rising and therefore property values are not rising, it is still a good time to buy. And you probably don’t want to wait too long, as I’ve seen with several instances lately… It is a nice change to see buyers fighting over a property instead the sellers begging someone to buy…

As John said – Pricing is still extremely important in this market. Listen to a realtor or an appraiser you trust, it can save you months or years of waiting and as it is said time is money…

As the end of the year gets closer, lets all hope that the European economies stabilize and the US economy gains more speed. And take advantage of the well-priced properties before someone else gets there first.